Keywords

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1 Introduction

In Central Europe, especially in Germany, economic and social activities of state-authorities and non-profit organizations are based on long-term traditions in practice and in the history of economic thought. During the 16th and 17th century, various kings, princes, and other royal personages ruled the lands. These authorities widely dominated and regulated production, trade, and consumption in the national economies of European states. The 18th century, in particular the second half, brought about the process of liberalization of the individual from political powers and related institutions. From the point of view of the history of economic thought, the influence of state-authorities during the long-term period of feudalism and mercantilism declined, whereas the influence of markets and of non-governmental organizations increased. During the 19th century, declining state-authorities and growing private market-institutions left room for non-profit-organizations and other related institutions to emerge. Therefore, especially in German-speaking countries, not only public authorities and governmental institutions were distinguished from private market-institutions and enterprises, but also institutions and organizations “in-between”. Thus, the “three-sector-structure” of the market economy emerged. The German economist Friedrich B.W. von Hermann in his studies Staatswirtschaftliche Untersuchungen (1832, 1870, 1924) introduced the term Gemeinwirtschaft in order to refer to those economic activities that were carried out jointly within a family, a monastery, a lifetime-community or a wealth-community. The term “Gemeinsinn” was introduced in order to refer to the joint element of these institutions, in contrast to individual utility and profit-oriented behaviour of actors in the market-economy. According to von Hermann the actors and institutions of “Gemeinwirtschaft” were designated by renouncing any struggles among members of an institution or organization about benefits and burdens (Wendt 1956, 118). But the author was convinced, that this attitude would be possible only by caritas/love (“Liebe”) in families and by religious connections in monasteries. Here, the “door is open” for further discussions on the definition of “Gemeinwirtschaft”—in relation to religious documents and declarations by the Churches including Encyclicas by the Pope. But from the study of the former literature it should be kept in mind that von Hermann already pointed out important characteristics of “Gemeinschaft”: a closed group of persons as actors of the concerned institution or organization, distinct economic thinking (“Gemeinsinn”), a specific way of distribution of wealth and a special form of property. In von Hermann’s view, the term “Gemeinwirtschaft” should be focussed on small units of communities for life. They should be acknowledged as single microeconomic units within the macroeconomic system.

Later during the 19th and 20th century the meaning of the term “Gemeinwirtschaft” has changed (Ritschl 1965, 331). Nevertheless, the term was applied continuously in order to describe a sector of economic and social institutions and activities aiming at economic justice and stabilization of economic and social welfare in so-called “mixed economic systems” (Weisser 1963; von Nell-Breuning 1986, 853–857).

2 Definitions of Public Economy (“Gemeinwirtschaft”)

Since the beginning of the 19th century different definitions of “Gemeinwirtschaft” have been proposed by authors of distinct schools of economics and social science. To point out the broad variety of approaches, apart from F.B.W. von Hermann (s.a.), the concepts by several scholars of economics and social development at the late 19th century will be compared (Stavenhagen 1969). Wilhelm Roscher, the outstanding historian of economic thought of the 19th century, later developed a much broader concept of “Gemeinwirtschaft” than von Hermann. According to Hans Ritschl, it was Wilhelm Roscher’s idea to amplify the concept of “Gemeinwirtschaft” by including wide spheres such as the home economy, the economy of corporations or associations, the economy of communities, the state economy and even the total national economy (Roscher, W., System der Volkswirtschaft, I, Stuttgart 1854). Roscher based this widened definition on the term “Gemeinsinn”, meaning social thought. This wider concept met with criticism, i.e. by the later member of the Younger Historical School, Adolph Wagner, who was opposed to Roscher’s idea to cover the total national economy by the term “Gemeinwirtschaft” (Ritschl, 332).

Prior to Wagner, the scholar of economic and social thought, Albert E. Schäffle, developed and introduced the following distinction between two systems: first, a system of “Gemeinwirtschaft”, understood as a “social system of human economy” (1867), and second, the “private, speculative and capitalistic system”, based on the economic organization of productive resources by profit-oriented behaviour of capital owners (Chaloupek 2010, 177, 195; Schmidt 2010, 155–160). In a nutshell, while Schäffle circumscribed the system of “Gemeinwirtschaft” as an “economy of several or many people together” (“Wirtschaft für Mehrere oder Viele gemeinsam”, Ritschl, 332), he substituted the element “Gemeinsinn” by the form of organization as a basic characteristic of “Gemeinwirtschaft”. This form of organization should be characterized by voluntary interest and freedom of decision-making. Finally, Schäffle distinguished on the one hand voluntary, free organizations, i.e. clubs pursuing the interest of public welfare (“gemeinnützige Vereine”) such as cooperatives and foundations, and on the other hand enforced cooperations (“Zwangsverbindungen”), i.e. the state, communities and different kinds of corporations (Ritschl, 332). Later on, Adolph Wagner completed Schäffle’s terminology by a generalized distinction of principles of organization and economic systems: the individualistic, private system; a public or enforced public system (“zwangsgemeinwirtschaftlich”); and a “caritative” (“karitatives”) system (Ritschl, 332). The basic relevance of these terms for studies on “Gemeinwirtschaft”, however, turned out only later. During the first half of the 20th century Schäffle’s terminology became more influential (1867) as compared to Adolph Wagner’s related publications at the end of the 19th century (Ritschl, 332).

Another basic distinction has to be considered in relation to “Gemeinwirtschaft”: the distinction between individual and public, res collective preferences (“Einzel- und Gemeinbedürfnisse oder Kollektivbedürfnisse”). Again we find these terms at first in von Hermann’s works and later—with some modifications—in Adolph Wagner’s publications related to the diverse “systems” (Gross 1900, 165).

3 Examples of the Studies of German Authors on Social Development Around 1890

3.1 Driving Forces of Social Development

At the end of the 19th century different driving forces proposed and pushed forward the ideas and concepts of social development in Germany and Central Europe (Stegmann 1988, 1231–1234). According to the proposal by Heinz Lampert, two groups of driving forces may be distinguished: firstly individual persons, mainly during the first half of the 19th century, and secondly clubs, unions, cooperatives and political parties mainly during the second half of the 19th century (Lampert 1980, 77). Concerning the individual persons Lampert distinguished two subgroups: promoters of social reforms, who tried to push forward social reforms on the grounds of the existing social order (“Gesellschaftsordnung”), and promoters of social revolutions aiming at the change of the legislation and social order. Among the examples of individual persons having promoted the social movement, Lampert named “Ketteler, Kolping, Schulze-Delitzsch, Marx, Engels, Lassalle, Naumann et al.” (Lampert 1980, 77). While Ketteler and Kolping represent the first subgroup of persons, Marx and Engels represent the second subgroup. Thus, social reformers are distinguished from social revolutionaries. The influences of the individual persons on the social movement in Germany are documented and widely known, but it is worthwhile to take note also of less well-known persons who contributed to social reforms. Moreover, persons should be considered who acted as authors of social studies or who contributed to general or social policy in political or social institutions or by academic activities. Concerning the second group of driving forces—clubs, cooperatives, unions etc.—individual persons should be considered, too: Kolping and Schultze-Delitzsch may be named in particular.

The persons having pushed forward social reforms included entrepreneurs, representatives of the churches and Christian organizations, university teachers and scientists, but also state-employees and members of Parliament (Lampert 1980, 78ff). For various reasons, the representatives of the Christian churches strived for different programs of social reforms. They wanted to pursue the idea of social justice, take care of handicapped and poor persons who suffered from the economic and social effects of industrialization, and intensify the activities of social policy to the benefit of the poor groups of the society. By their activities representatives of the Catholic Church and the Protestant Church wanted to contribute to the stabilization of the society.

3.2 Schools of Economic Thought and Their Interest in Social Development

Around 1890, the Central European schools of economic thought, especially in the countries “of German tongue”, were heavily involved in debates and struggles for economic stabilization. Demands ranged from measures and methods to carry out efficient policy reforms to measures of enforcing revolutionary change in the national economy and society. In Germany, the proposals of authors of different schools of economic thought encompassed measures of social policy or measures aiming at the introduction of a new economic and social system—or—as a “third way”—recommendation of the organization of a specific economic sector: the public economy. The authors of the schools of economic thought being involved in related debates and publications at the end of the 19th century, included in particular members of the Younger Historical School, socialist authors, followers of the Classical School and pioneers of the Neoclassical School. The aforementioned authors Roscher, Schäffle and Wagner represented the Historical Schools; the publications by Emil Sax on the public economy should be mentioned additionally. The authors were involved in the aims and organization of Public Economy in the sense of “Gemeinwirtschaft”. One has to keep in mind that the designated schools of economic thought included different concepts of economic policy, especially concerning the relations of the private sector, the special “public sector,” and the national State. Therefore, the differences between the recommended measures of social policy and of “public development” (“Gemeinwirtschaft”) are not surprising. Authors of classical economics argued in favour of free markets and a restricted segment of public institutions and related interventions. Authors of socialism differed substantively as to their demanded measures: to enforce strict regulations of allocation and distribution in specific sectors or to change the total economic and social system. Authors of the Public Economy (“Gemeinwirtschaft”) recommended to combine interventions into the market and regulating measures (Rittig 1977), partly enforced by the state, for example according to Adolph Wagner’s proposal of specific cooperatives, the so-called “Zwangsgemeinschaften”.

A concise review of the history of economic thought on Public Economy (“Gemeinwirtschaft”) has been provided by Thiemeyer (1973, 1974, 1981). In his article on “Gemeinwirtschaft” (1981) he points out the conditions of the institutional framework of economic activities taking place “between” private markets on the one hand and the State and public government on the other. He emphasized the author Karl Heinrich Rau as an important representative of the theory of “public economy” (“Gemeinwirtschaft”). Furthermore Thiemeyer pointed towards important contributions by other members of the German Historical Schools, like Bruno Hildebrand, Karl Knies, Emil Sax and the aforementioned authors Albert Schäffle and Adolph Wagner (Thiemeyer 1981, 527). In his review-article he identifies the period 1867–1900 as the “classical period of the Public Economy (“Gemeinwirtschaft”), beginning with Schäffle’s second edition of his book “The social system of human economy” (Thiemeyer 1981, 527; Schäffle 1873). Carl Rodbertus, the founder of the concept of “State-Socialism”, must also be considered. He believed, that the Prussian State would be able to bring about social justice and economic and social progress, a concept that was also acknowledged by Adolph Wagner (Thiemeyer 1981, 528). Concerning Wagner, and additionally regarding Schäffle and Sax—altogether the “three stars” of the development of the concept of “public economy” during the late 19th century—the concept of “subsidiarity” (in German also called “Lückenbüßertheorem” of public welfare) has to be considered. It was demanded by Emil Sax in his analysis of the price-policy of public enterprises, especially of railway companies in his related basic study (Sax 1887, 1918/22; Thiemeyer 1981, 529, 539).

From the considered publications on Public Economy (“Gemeinwirtschaft”) in Germany at the end of the 19th century it may be concluded, that the institutional structures and framework conditions of developing specific concepts of “Gemeinwirtschaft” have been favourable for authors who were orientated towards the churches. In particular, it should be emphasized that these authors were the “driving forces” of the social movement around 1890. In this respect, the pontificate of Leo XIII (1878–1903) has to be reconsidered.

Pope Leo XIII (1878–1903) tried intensively to solve, or at least to reduce the conflict between the Catholic Church and the political, social and cultural activities of the modern State (Verlag DT 2006, 147; Maier 1987, 905–907). Though he was opposed to rationalism and liberalism, and also to freemasonry, he acknowledged the State as being independent from the Church. He also acknowledged democracy, though he preferred a conservative system of political government. During his pontificate new basic documents of the Catholic Social Doctrine were published, as the encyclical Rerum Novarum (1891) (Rauscher 1988, cols. 1250,1251; Frambach and Eissrich 2016, 29–54). He also sustained the development of the Christian social movement and of measures to solve the Social Question, mainly to reduce the poverty of labourers (Frambach and Eissrich 2016, 30). In this regard Leo XIII was the first Pope who kept these activities on his agenda. Concerning international relations between the Catholic Church and the States worldwide, he succeeded in diminishing the cultural conflict (“fight”) with Germany and Switzerland and to reduce political differences with European and American States, but in Italy he failed to reestablish the “Church-State”. Also, he did not succeed in developing new, functioning relations to the Orthodox Church in Eastern Europe. In reviews of his pontificate as a whole, he is seen as a very successful political pope, and in particular a “Labour Pope” (“Arbeiterpapst”), who sustained intensively the social movement and furthered the development of social and economic policy, even in the long run (Maier 1987, 907).

3.3 Specific Authors of Studies on Social Development and “Public Economy”

Considering the broad topic of Public Economy and the topic at hand of identifying driving factors of social movement, especially by the churches, in particular four important authors come to mind, apart from Ketteler (compare the chapter by D. Eissrich in this volume) and other highly respected persons. In this section, a short description of their biography and some of the relevant writings and teachings is presented.

3.3.1 Franz Hitze

The first example is Franz Hitze (1851–1921). He was the son of a wealthy family in the Sauerland region not far from Cologne. During his studies of philosophy and theology in Würzburg he became interested in publications by W.E. von Ketteler and in studies on the Social Question (Rauscher 1986, cols. 1292–1293; Bredendieck 1953; Brakelmann 1971; Lampert 1980, 86–87). On the basis of these studies he not only got into opposition to H. Schulze-Delitzsch and his concept of “liberal socialism”, but also to the concept of “radical socialism” as represented by F. Lassalle and K. Marx. In opposition to these concepts F. Hitze developed and discussed his own concept of “Christian Socialism”. He was introduced into the position and obligations of a priest in Paderborn (1878). During the following years (up to 1880) he continued his studies in Rome, where he worked intensively on K. Marx’ ideas as outlined in his “Capital”. After the return from Rome (1880), Hitze worked as general secretary of a new organization called “Labourer Welfare” (“Arbeiterwohl”). Later he established several clubs for catholic workers, es a national club for Catholics in Germany (“Volksverein für das katholische Deutschland”). The purpose of this institution was to teach catholic people the concept of social responsibility and prepare them to carry activities in line with this concept. Hitze also got involved into the movement of Christian trade unions and the German “Caritas” organization. Furthermore he cooperated with the management of the political party “Zentrum”. He contributed to the related program of social policy. In 1882 he became member of the Prussian Parliament. Since 1884 he also got the membership of the German “Reichstag”. In 1893, Hitze was offered a new academic chair dedicated to the teaching and research of “Christian social doctrine” (“Christliche Gesellschaftslehre”) by the University of Münster (Rauscher 1986, col. 1292).

In his publications Hitze criticized the social development in the industrial society intensively. He had elaborated this point of view during his earlier stay in Rome, and on these grounds he proposed to solve the social problems. Herewith he was influenced by another academic and political journalist: Karl Freiherr von Vogelsang (1818–1890). Hitze indeed argued to some extent similarly to von Vogelsang, especially as far as the system of the economy and society is concerned. He favoured the idea to solve the social problems by renaissance of a medieval economic and social order. It should be based on guilds and related institutions, but established on amplified economic and democratic grounds. He obviously was convinced that socialism should be realized in the future, either in terms of an absolute social democratic socialism by means of the State or as a relative, conservative and stable (“healthy”) socialism by the guilds (Rauscher 1986, col. 1292).

As a member of the German “Reichstag”, Hitze concentrated his work on the preparation and discussions on legislative projects concerning the protection of Labour at industrial production and new laws on social security. On behalf of Hitze’s first speech in Parliament (1885) Chancellor Bismarck called him the “agitating chaplain”. Obviously, Hitze was clearly opposed to Bismarck’s policies. Therefore, he could only carry out his ideas and proposals for social reforms after Bismarck’s period of political activities in Parliament, the so-called “Bismarck-era”, had ended (Rauscher 1986, col. 1292).

3.3.2 Karl Freiherr Von Vogelsang

The second author who can be considered a driving force of the social movement at the end of the 19th century was the political journalist and editor Karl Freiherr von Vogelsang (1818–1890). He was the member of a conservative agrarian family of Northern Germany. After studies of law, he became employed in the Prussian public service (“Staatsdienst”). He quitted that professional position, because he was opposed to the revolutionary movement in Germany in 1848. The related unrest was in contradiction to his ideal of reforms of the society on the grounds of guilds and related institutions. Therefore he decided to go to Austria and to convert to Catholicism in Innsbruck (1850). But he returned to Germany and settled with his family in Cologne (1854), where he edited a political journal (in cooperation with a second editor). After several years (1864), he changed his location again: he moved to Vienna—forever (Oeliger and Vogelsang 1989, cols. 765–766). Since 1875 Vogelsang lived in Vienna; he held a position as catholic political journalist opposed to adherents of liberal and centralism-oriented political concepts. He promoted effective reforms of the society; he was called “father of the catholic school;” became a leader of the catholic social movement in Austria; and edited a monthly journal for social science and national economy (since 1883), entitled “Monatsschrift für christliche Sozialreform”. This journal successfully gave many important impulses on ideas, aims, programs, and measure of social policy and social development. He was designated to be the most well-known representative of the catholic social movement in the countries applying the German language. Von Vogelsang was continuously opposed to rationalistic liberalism. In his political publications he argued in favour of a renaissance of a former social order, based on guilds and established on the grounds of integrated economic, social and political functions of related institutions. They should be determined to form a “Parliament of Future”. The State should be designated by the monarchy in terms of a “social kingdom” (Oeliger and Vogelsang 1989, col. 766). With his ideas and his proposed concept of an amplified social reform von Vogelsang was involved to develop further aims and measures of social movement. These were promoted earlier by authors of romanticism. In this respect, the best known author of romanticism in the countries of German language was Adam Müller. He is also considered in studies on the history of economic thought (Müller 1819; Andreae 1961, 465).

3.3.3 Johann Heinrich Wichern

The third example of an author, who was concerned with social reforms and social movement under the conditions of industrialization, was a representative of the Protestant Church: Johann Heinrich Wichern (1808–1881). He established institutions which were linked to the Protestant Church and focused on social services for poor or/and disadvantaged persons. His activities to set up Christian welfare-oriented organizations like the “Internal Mission” pursued two aims: to solve social problems by moral renovation of people, and to contribute to social resistance against a political revolution (Lampert 1980, 87).

The events in Germany during the revolutionary year of 1848 prompted Wichern to more activities such as enlargement of the institutions of the “Internal Mission” and organization of large congressional meetings. In order to support children, Wichern founded a caritative institution, called “Rauhes Haus”. The Prussian King engaged him as an expert for the prison reform. Wichern also supported the “Internal Mission” by publishing a basic document—“Denkschrift”—about “The Internal Mission of the German Protestant Church” (Talazko 1989, cols. 983–984). On the whole, Wichern’s activities encompassed the following three fields of practical activities: organizing and running the institution of “Rauhes Haus”, managing the “Internal Mission,” and preparing and contributing to a prison reform in Prussia (Lampert 1980, 87).

3.3.4 Victor Aimé Huber

Further examples of persons who organized institutions and measures of social welfare and social development in practice might be considered, i.e. the promoter of the concept of cooperatives and of social policy: Victor Aimé Huber (1800–1869). He amplified Wichern’s idea of love/caritas by the idea of justice and the demand for a basic reform of society (Faust 1980). Like Wichern, Huber intended to avoid an expansion of proletarian poverty in Germany by instituting practical measures of social policy. A visit to England convinced him that higher social development in society is best achieved by putting more practical measures of social policy in place (Lampert 1980, 87–88; Mundig 1984).

4 Conclusions

Though the examples of authors considered, who published studies on social development and the Public Economy (“Gemeinwirtschaft”), only covered a small segment of the literature on economic and social problems during the late 19th century, the following conclusions may be drawn from the sections above:

Out of the variety of driving forces of social development—entrepreneurs, individual academic persons, economic and social organizations, clubs etc.—authors of economic studies, social documents, political advice or of recommendations concerning the Social Question in European countries are important subjects of studies on the development of the Public Economy (“Gemeinwirtschaft”).

The authors considered are acknowledged in relation to the schools of economic and social sciences of the late 19th century, the time period of this study. The relevant schools are mainly the following: the school of late classical economics, the German historical schools, scientific socialism and the beginnings of the neoclassical school. The schools are representing the framework conditions for the activities of the authors.

The examples of authors considered (F. Hitze, K.F. v. Vogelsang, J.H. Wichern a.o.) pursued different programs and activities, but the authors were deeply involved in the basic conflict between the social development and the State and can be interpreted as “driving forces” of social development. This is illustrated by the activities carried out by representatives of the churches and of church-oriented politicians (Hitze, Vogelsang a.o.).

Though the documents of the churches (like the encyclicals of the Pope, es Rerum Novarum) have not been commented on in this study directly, the relation between the churches, es the Catholic Church, and the State at the end of the 19th century is part of the background of the study. Moreover, it determined the scientific position of authors, who were involved in research and publications on Public Economy (“Gemeinwirtschaft”). The three outstanding economists, who paved the way for Public Economy in Germany, Roscher, Schäffle, and Sax, developed a new direction of economic thought during the second half of the 19th century and thus pointed towards a solution of the deep conflict, “liberalism versus socialism”. Their concept of Public Economy was focused on promoting a “third way” in order to bring about higher economic and social development.